A Statement from PAC Chair on Contract Management of Medical Services

18 October 2012

A statement from the Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts

People with disabilities must be able to access the benefits to which they are entitled. The department relies on medical assessments to make sure it awards the right benefits to the right people. Getting this wrong can have devastating impacts on individuals and their families.

Atos Healthcare billed the department for over £110 million to conduct the medical assessment of some 740,000 people in 2011-12. Over the same period, an estimated 20,000 people received substandard assessments. In March this year, 1 in 4 cases was taking Atos more than 56 days to deal with.

This has resulted in distress, uncertainty and financial hardship for those people who are genuinely in need of and entitled to disability allowance. Indeed, it is a mark of this process's shortcomings that 38 per cent of appeals against the department's decisions on Employment and Support Allowance entitlement have been upheld.

The department's management of this contract has been unacceptably loose and permits loopholes that can all too easily be exploited by contractors. I am stunned to discover that the department does not check and challenge the key performance data that supports invoices. The financial model that informs contract charges was designed by Atos and the department lacks an understanding of how it even works. The Department's inaccurate forecasting of demand for services has undermined its ability to hold Atos to the terms of its contract.

The Department must take immediate steps to get a tighter grip on this contract. The number of substandard assessments must be slashed and the department needs to understand why so many appeals are successful. Atos's performance must improve dramatically, and it is crucial that the department improves the accuracy of its forecasting so that it can take a much more robust line when contractors underperform, rather than allowing them to hide behind unexpected demand.

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